By on July 21, 2021

volvo emblem logo grille

Volvo Cars is plotting to buy out parent company Zhejiang Geely Holding and free itself of its Chinese joint venture. The Swedish (currently Swedish-Chinese) manufacturer has been hinting at the prospect of going public with an IPO, which most analysts believe would be bolstered by creating some distance from Geely.

While the Chinese Communist Party has ended mandates requiring electric vehicle firms from entering into joint ventures with established domestic businesses, the rule still exists for traditional automakers. However, the general assumption is that most will attempt to regain full ownership of their Chinese assets when the law is lifted next year. But critics are cautioning that the nation is under no obligation to maintain any commitment to foreign entities once they’ve split with their local partners. 

Based upon international concerns of intellectual property theft, your author would even argue that China already has what it needs from these businesses. Why not allow them to buy themselves out of relationships and assume total financial responsibility for its facilities when the government can place whatever restrictions it wants moving forward? Perhaps I’m being too pessimistic. But China has a tendency to unapologetically do what’s best for itself and already benefited from the technological sharing required via JVs.

Then again, Volvo has said it receives a high degree of autonomy from Geely. But it also seems content with not getting any cozier and dodged a potential merger that was floated by its Chinese parent company in 2020.

While the details of the current deal have not been shared by either company. Reuters reported that Volvo would be assuming total control of factories in its manufacturing plants in Chengdu and Daqing, as well as its R&D center in Shanghai. It also speculated as to why Geely might not be terribly clingy when Volvo’s sales are dwarfed by the Germans.

From Reuters:

Volvo Cars sold over 166,000 vehicles in China last year, and its dealers are offering heavy discounts to compete with other premium brands like BMW and Audi.

The Gothenburg-based company was bought by Geely from Ford in the aftermath of the global financial crisis more than a decade ago, and has since shared ownership of its Chinese plants with its parent.

Volvo Cars said the transactions, which are subject to regulatory approval, would be carried out in two steps, starting in 2022 and seen formally completed in 2023.

“These two transactions will create a clearer ownership structure within both Volvo Cars and Geely Holding,” Geely’s CEO Daniel Li said in a statement, which did not refer to the possible IPO.

Volvo Cars has referenced the IPO on numerous occasions, however, with CEO Håkan Samuelsson previously indicating it could be underway before 2022. On Wednesday, he said his company would become the first foreign automaker to obtain full control over its Chinese operations. Geely leadership has also hinted at this, Li suggesting in June that Volvo would move quickly if placed on any stock exchange. Regardless, the two companies will still share platforms and components for the foreseeable future.

[Image: Volvo]

Get the latest TTAC e-Newsletter!

31 Comments on “Volvo Buying Itself Out of Chinese Joint Venture...”


  • avatar
    ajla

    How would this impact Polestar? And the Volvo/Polestar EV technology in general?

  • avatar
    28-Cars-Later

    Wow finally some actual automotive industry news, and good news at that (I think).

    • 0 avatar
      Kendahl

      Maybe. Maybe not. The Chinese Communist Party does what’s best for the Chinese Communist Party. If the Chinese people are lucky, that coincides with what’s good for them, too. Beyond that, the CCP doesn’t give a damn about anyone. Once they have gotten what they want from their “partners”, I wouldn’t put it past the CCP to cut them off at the knees so they can no longer compete with wholly Chinese companies.

      It’s the foreign policy goal of the CCP to replace the United States as the dominant world power and they are even more brazen about it than the United States was during the last century.

  • avatar
    slavuta

    They better up the number of cylinders or I am out even if they dump China

    • 0 avatar
      Rocket

      Volvo is committed to going fully electric by 2030 with or without Geely, so they aren’t about to invest another penny in ICE’s. I’m afraid the max number of cylinders will remain at four for now, and will drop to zero in the mid-term future.

      • 0 avatar
        slavuta

        May be they should make “Last edition” 6cyl lineup. Watch it fly off the lot.

        “Volvo Cars to harness real-time data from customer cars to set new safety standards”

        Run

        • 0 avatar
          Rocket

          Sounds great, but it would need to be an awfully small straight six since the current SPA models were engineered around a 4-cylinder drivetrain. Such a shame.

        • 0 avatar
          eng_alvarado90

          Their I-5 engines were sweet as well. I remember a previous gen S60 2.5T I rented a few years ago. I’d rent another one if available…

      • 0 avatar
        28-Cars-Later

        “so they aren’t about to invest another penny in ICE’s.”

        Smartest move is to license Toyota’s HSD tech and for the interim become a de facto coachbuilder for hybrids. Toyota drivetrain with Volvo safety and comfort actually sounds appealing.

  • avatar
    cimarron typeR

    makes no matter to me except I hope it helps the Swedish worker for them to be Chi free. I’m not really interested in any of their products. If you take away the cut rate pricing from low price labor the cars make even less sense with their current offerings.

    • 0 avatar

      In the US market currently the only car produced in China is the S90… so I don’t think the low Chinese labor rates are having a big impact on the price point since no one buys S90s.

  • avatar
    eng_alvarado90

    Their I-5 engines were sweet as well. I remember a previous gen S60 2.5T I rented a few years ago. I’d rent another one if available…

  • avatar
    conundrum

    The Chinese guy Li Shufu who owns both Geely and Volvo, 9.5% of Mercedes Benz stock, ten or more percent of Volvo Trucks and a Danish bank etc etc, is merely consolidating his position. Getting his Volvo Cars subsidiary to buy his Chinese automotive holdings is a financial move that has not much to do with China, Sweden or the paranoid USA. When he has one pure automotive company, and is not forced to JV his Chinese Volvo holdings with Geely after the relaxed ownership rules take hold next year, then he will issue an IPO on the lot. After which, being cash-rich, he’ll be off to buy up other stuff around the world.

    This all has bugger all to do with the Communist Party of China, or all the other idle chatter from the uninformed commentators that inhabit this blog and those that write half-informed articles. Volvo’s Swedish management are merely issuing statements OKed by the boss to obfuscate reality, a very capitalist thing to do. And make no mistake, Li Shufu who runs the whole enterprise is no commie. He’s not exactly a guest in Beijing hobnobbing with the Central Committee. He’s just a bit more discreet with his billions than some of the other Chinese billionaires who’ve been told to tone things down recently.

    Does anyone here keep up with international news, or is just a sinkhole of uninformed hostility?

    • 0 avatar
      ajla

      “Does anyone here keep up with international news, or is just a sinkhole of uninformed hostility?”

      Relax.

      • 0 avatar
        Lou_BC

        “Does anyone here keep up with international news, or is just a sinkhole of uninformed hostility?’

        Just like politics, it depends on who you ask?

    • 0 avatar
      Arthur Dailey

      @conundrum, too bad that you ignore ‘the elephant in the room’. China is not a democracy. Li Shufu is an elected member of National People’s Congress. Meaning that his candidacy was vetted and approved by the Central Committee of the CCP.

      Any semblance of the ‘rule of law’ in China is illusory. As proven by the recent government actions in Hong Kong. Or longer term actions in Tibet, and against the Falun Gong or Uyghurs. And the recent Chinese government involvement in global hacking and intellectual property theft. And in Canada we are well aware of the Chinese government’s illegal incarceration of the ‘two Michaels’.

      Any economic activity is sanctioned by the state (CCP) and is aligned with their national and international goals/strategies.

      The same applies to Russian economic activity.

      • 0 avatar
        Snooder

        Not really.

        The thing here with Geely specifically is that Geely is kind of the outcast upstart competitor to the actual State owned enterprises like SAIC.

        If the CCP was really in the sort of control you are talking about, Geely wouldn’t even exist.

        That’s not to say thay China is particularly democratic, just that the illusion of some sort of masterminded state control over all aspects of rhe country is very clearly contradicted by the facts here.

  • avatar
    ToolGuy

    Watched Casino Royale (2006) last night [since I’ve already watched anything worth watching].

    Peak Premier Automotive Group. 1970’s-television-series level of product placement. Very lopsided proportion of Aston Martin, Jaguar and Land Rover products in parking lots throughout Europe.

    Daniel Craig’s Bond drives a Ford Mondeo? Ok.

    PAG dismantling began same year the movie was released.
    https://en.wikipedia.org/wiki/Premier_Automotive_Group

  • avatar
    Ol Shel

    Congratulations to President Xi and the Chinese people on the 70th Anniversary of the People’s Republic of China!

    — Donald J. Trump (@realDonaldTrump) October 1, 2019

  • avatar
    Pig_Iron

    Prepare for Communist chicanery.
    :-/

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • slavuta: Old_WRX Remember, when Trump was president, CDC guidance was to write every death as covid if it tested...
  • slavuta: It is all “philosophical” until you get it. There are more studies on that site with real cases
  • Lou_BC: LOL
  • Lou_BC: @slobuto – I take it you don’t read what you post? “The issue of the risk of vaccination...
  • slavuta: “In this line of argument, “vaccinated America” has “had enough” of the unvaccinated. “This was the...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber